Beyond Pledges, Haiti Needs Bank Account

By Jeffrey SachsWashington Post/Bloomberg, 23 January 2010

President Barack Obama has declared that the US will not forsake Haiti in its moment of agony. Honoring this commitment would be a first for Washington.
To prevent a deepening spiral of death, the US will have to do things differently than in the past. American relief and development institutions do not function properly, and to believe otherwise would be to condemn Haiti’s poor and dying to our own mythology.

In the past two decades, US interventions have done much more harm than good to the Haitian economy. In the early 1990s, Washington imposed a crushing trade embargo to bring about democratization – specifically, the reinstatement of democratically elected President Jean-Bertrand Aristide. The embargo destroyed Haiti’s fragile manufacturing industries.

Then, true to America’s political swings, ideologues in the Bush administration spent years trying to oust Aristide, first by foisting a de facto and illegal aid freeze on international development agencies, and then by brazenly toppling Aristide.

Now it’s time to save Haitian lives by the millions, or watch a generation perish. A serious response will require a new approach. Obama should recognize that the US government alone lacks the means, attention span and true regard for Haiti that is needed to see this through past the most urgent phase.

Typically, a tragedy such as this is followed by international pledges of billions of dollars, but then only a slow trickle of help. The recovery operation needs money in the bank – in a single, transparent, multi-donor recovery fund for Haiti and the world to see. Haiti does not need a pledging session; it needs a bank account to fund its survival and reconstruction. The Inter-American Development Bank would be an excellent venue; it is well-run and highly regarded, already serves as Haiti’s largest development financier and could bring in donor partners from around the globe.

How would a Haiti Recovery Fund be organized? It should receive emergency outlays from the US and other donors; organize a board that includes members appointed by Haitian President René Préval, the UN secretary general and donors; and empower a management team to formulate and execute plans agreed to by the Haitian government.
The recovery fund would focus first on restoring basic services needed for survival. For months to come, medical supplies from abroad should be stockpiled and then distributed in the capital and beyond. Makeshift surgical units and clinical facilities will be essential. Power plants on offshore barges will be needed for electricity until new plants can be constructed.

Emergency relief should quickly and seamlessly transform into reconstruction and development. If we stop at humanitarian relief alone, Haiti will be back in crisis soon enough, after the next disaster. The first step in this transition is food security: Haiti’s farmers will need seed and fertilizer within weeks if they are to grow food for a destitute country. The displaced urban population will need income support or food transfers to subsist. The World Food Program’s effective food-for-work projects can help feed workers recruited to rebuild roads and buildings.

After the extreme emergency period over the next few weeks, growing more food in Haiti will be far cheaper, more reliable and more sustainable than living on imported food aid. Supplying the farm inputs to Haiti will require more grants – as impoverished farmers have no capacity to buy seeds, fertilizer and small-scale equipment – as well as official aid to help deliver such materials to Haiti’s remote villages.

New shelters must not be makeshift units that would be destroyed by Haiti’s frequent floods, landslides and hurricanes. The country will need a revived and expanded construction industry to produce the brick, reinforced concrete and other vital materials. Private companies, domestic and international, should be contracted to set up operations.

The Haiti Recovery Fund should be constituted for five years -a suitable period to respond to such a challenge. Electoral politics in Haiti should be suspended for at least one year as well. This is no time for national elections; the people’s survival is the first purpose of politics.

How much money would the Haiti Recovery Fund need? And where should it come from? Here is a rough estimate: Before the earthquake but after the hurricanes, I had calculated an urgent (and unmet) development financing need of $1.4 billion per year for Haiti, up from about $300 million currently. Basic urgent reconstruction costs will add perhaps another $5 billion to $10 billion over the next few years. One can imagine annual disbursements of $2 billion to $3 billion annually over the next five years.
Obama should seek an immediate appropriation of at least $1 billion this year and next for a Haiti Recovery Fund, and ask other countries and international agencies to fill in the rest, not with promises but with cash. The obvious way for Washington to cover this new funding is by introducing special taxes on Wall Street bonuses, utterly unjustified payments that will be announced in the next days.

Haiti will suffer a quick death of hunger and disease unless we act, and the United States will suffer a slow and painful moral death unless we respond to the extreme distress of our neighbors, whom we have neglected for so long and, at times, even put in harm’s way.